France Telecom has finalized a deal to buy most of its partner's stake in Egyptian mobile operator Mobinil for $2 billion, leaving the venture with 95% French ownership but significant Egyptian board and management presence.

France Telecom [2]was already the biggest shareholder in Mobinil, and Egypt is a key part of its effort to expand in high-growth emerging markets [3]in Africa and the Middle East.

The deal, which confirms a preliminary agreement struck in February[4], recasts the terms of its relationship with Egyptian tycoon Naguib Sawiris, who had a put option to sell out completely to France Telecom starting in September 2012.

Sawiris will instead sell much of his stake, and minority shareholders of listed holding company ECMS can choose to keep their shares or accept a tender offer from France Telecom.

Under the terms of the accord, France Telecom [5]will buy most of the stake held by Sawiris' holding company Orascom Telecom Media and Technology Holding (OTMT) for $33.54 per share.

It will then make a tender offer at the same price to the minority shareholders of ECMS, the listed portion of Mobinil which was trading at $29.7 on Thursday, below the tender price.

The deal is subject to regulatory approval in Egypt. The chairman of financial market regulator EFSA, Ashraf el-Sharqawy, said the watchdog would give its response next week.

"Investors are not certain the deal will be completed because ... the companies need to submit the tender offer terms to the regulator," said Mohamed Hamdy, an analyst at CI Capital. "We think the regulator will approve and that the shares will then jump to reflect the deal price."

France Telecom [5]would end up owning 95% of Egypt's largest mobile operator if all the minority shareholders accept, while Sawiris would keep 5%. The Egyptian side will retain six of 13 seats on the board and the same voting rights as before.

The new accord will also put into place a new system of call and put options through 2017 to set the terms under which Sawiris' OTMT can exit in the coming years.

Mobinil was the subject of a drawn-out legal fight between Sawiris and France Telecom several years ago that ended in April 2010 with a new shareholders' agreement. France Telecom has long said that keeping a local partner in Mobinil was important so as to be seen positively by consumers.

Although Sawiris is reducing his stake, the French company said it would continue to work with his holding company OTMT and was committed to keeping significant Egyptian ownership.

"We believe this transaction provides a solid basis for our continued partnership with OTMT in ECMS," said France Telecom Chief Executive Stephane Richard in a statement. "France Telecom intends to ensure that, if the conditions allow it, up to 15 percent of ECMS' shares are held by Egyptian shareholders, whether these are private or public companies, or individual shareholders."

This could mean that France Telecom would consider one day selling a stake to a new Egyptian partner or keeping part of ECMS listed on public markets, a spokesman explained.